HomeNewsSoaring prices push 1.6m more UK households into financial trouble – study
Soaring prices push 1.6m more UK households into financial trouble – study
July 11, 2022
Soaring prices have plunged more people into financial trouble than Covid-19, according to a study tracking the fortunes of UK households since the start of the pandemic.
A total of 1.6 million more households are struggling than the last time the study of 6,000 households reported nine months ago. It brings to 4.4 million – one in six – the number of households estimated to be in “serious financial difficulties” across the whole population.
The majority of those have cut the quality of food they eat, a third have pawned possessions and a quarter have cancelled insurance, the research shows. Single parents, renters, disabled people and families with three or more children are worst affected. Credit card debt is rising and a quarter have zero savings.
The only group in less financial strife since October 2021 are households with income of more than £100,000, according to the study by Abrdn Financial Fairness Trust and Bristol University.
“This is the first substantial deterioration we have seen since tracking people’s finances when the pandemic started,” said Mubin Haq, the chief executive of Abrdn Financial Fairness Trust.
“Times are tough for everyone, but it’s those on the lowest incomes who are particularly feeling the effects of rising prices.”
The proportion of households considered secure has fallen from 38% to 31%, and Wales and Scotland are worse affected than England and Northern Ireland, with more than one in five households in “serious difficulties” financially.
Soaring expenses have been driven by rises in energy bills, transport costs and groceries, in that order.
Last week, analysts predicted the energy price cap is on track to rise to £3,244 a year in October, when it is next adjusted, up from £1,971 a year. Annual supermarket inflation hit 8.3% last month.
The three most common tactics to cut costs during the period of the survey conducted in May to June were turning off the heating, reducing use of the cooker and taking fewer showers and baths.
Dean Burn, 62, a semi-retired IT project manager in Stockport, Greater Manchester, told the Guardian his financial predicament was “a lot worse” now than during the pandemic. He spends £620 a month on rent, which recently rose by 5%, and £260 a month on utilities and council tax, but only receives £850 a month in universal credit payments. It isn’t enough and he has used savings and some emergency payments from the council.
He is already in more than £7,000 of debt, has sold his car for scrap, uses food banks and is eating less – particularly meat. He also walks for miles rather than taking the bus and has cancelled TV subscriptions.
Asked about how he might heat his home this autumn, he said: “I am really not sure about how I am going to do that.”
He no longer visits the pub or takes day trips to the seaside. In his street after dark, windows flicker with the light only of TVs as neighbours save on electricity, he said.
Last week, he went to the council because he is worried about becoming homeless.
“I am looking at the calendar and counting the days until I get paid again,” he said. “I have worked for 41 years. This has really affected me.”
The proportion of households behind on at least one bill jumped from 9% to 14%, the study showed.
Faith Angwet, 37, a single mother of two from Southwark, south London, who used to work in fashion and retail, said her weekly shopping bill has risen from £200 during the pandemic to £400. She has cut back on spending on toothpaste, soap and washing powder and uses minimum lighting at night.
“If you open my fridge it’s like a single person is living there rather than a family,” she said. “It’s worse now than the pandemic. When I think about it, it’s enough to make my head explode. It is definitely grimmer than before.”